First Federal Savings & Loan Ass'n of Malvern v. Arkansas Savings & Loan Ass'n Board

Citations: 257 Ark. 985; 521 S.W.2d 542; 1975 Ark. LEXIS 1894Docket: 74-331

Court: Supreme Court of Arkansas; April 14, 1975; Arkansas; State Supreme Court

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On October 24, 1973, an application for a state charter to establish the First Security Savings and Loan Association of Hot Spring County in Malvern was submitted to the Arkansas Savings and Loan Association Board. Protests against this application were filed by Malvern National Bank, Bank of Malvern, and First Federal Savings and Loan Association of Malvern. Following a pre-hearing and public hearing, the Board granted the charter application, which was subsequently affirmed by the circuit court. First Federal Savings and Loan Association of Malvern is the appellant, while the appellees are the Arkansas Savings and Loan Association Board and First Security Savings and Loan Association of Hot Spring County. 

First Federal argues that the Board failed to provide specific findings of underlying facts as mandated by the Administrative Procedure Act (Ark. Stat. Ann. 5-710 (b. Suppl. 1973)), which requires that final decisions include findings of fact and conclusions of law, along with a clear statement of the facts supporting those findings. The court emphasizes the importance of adhering to this statute based on prior rulings. 

The court reviews the Board’s order paragraph by paragraph against the requirements of Ark. Stat. Ann. 67-1824 (Supp. 1973). The Board's findings state that First Security’s application was properly filed and met all prerequisites for charter approval. However, the findings are deemed insufficient because they merely restate statutory language without providing explicit underlying facts. Furthermore, Section 2 of 67-1824 requires a demonstration of the character and fitness of the proposed directors and officers to ensure the proposed association will be managed efficiently and honestly.

The Board's Order confirms that the individuals named in the Articles of Incorporation for First Security Savings and Loan Association of Hot Spring County possess the necessary qualifications and character to manage the association responsibly, in accordance with Act 227 of 1963. However, the findings lack explicit factual support, particularly regarding the qualifications of the proposed full-time managing officer, which the Board improperly delegated to the Supervisor instead of making an affirmative determination themselves, violating statutory requirements.

Furthermore, the Board found a public need for the proposed association based on untapped savings potential and demand for long-term loans, as well as sufficient business volume in the area surrounding Malvern, Arkansas, to suggest a successful operation. Nonetheless, these findings merely reiterate statutory language without providing specific factual details or evidence to substantiate them. Finally, the Board concluded that the operation of the proposed association would not adversely affect existing financial institutions, citing sufficient market potential to support both existing and new entities in the area.

The excerpt critiques Finding No. 7, indicating a lack of supporting facts for the Board's conclusion about sufficient savings and loan potential in the area. It emphasizes the need for details regarding the basis for the estimated savings and loan potential, the sources of these funds, the necessary amounts to support the applicant, potential losses for existing financial institutions, and other relevant facts. Section (5) of 67-1824 stipulates that the proposed association must be independent of existing financial institutions, with directors and officers having no affiliations that could compromise this independence. Finding No. 8 reiterates this section but similarly lacks specific supporting facts. Ultimately, the judgment is reversed, and the matter is remanded to the Circuit Court for further proceedings.